Earlier this month, guidelines for the Swachh Bharat Mission (Gramin) were released by the Ministry of Drinking Water and Sanitation. Key features of the Swachh Bharat Mission (Gramin), as outlined in the guidelines, are detailed below. In addition, a brief overview of sanitation levels in the country is provided, along with major schemes of the central government to improve rural sanitation. The Swachh Bharat Mission, launched in October 2014, consists of two sub-missions – the Swachh Bharat Mission (Gramin) (SBM-G), which will be implemented in rural areas, and the Swachh Bharat Mission (Urban), which will be implemented in urban areas. SBM-G seeks to eliminate open defecation in rural areas by 2019 through improving access to sanitation. It also seeks to generate awareness to motivate communities to adopt sustainable sanitation practices, and encourage the use of appropriate technologies for sanitation. I. Context Data from the last three Census’, in Table 1, shows that while there has been some improvement in the number of households with toilets; this number remains low in the country, especially in rural areas. Table 1: Percentage of households with toilets (national)
| Year | Rural | Urban | Total |
| 1991 | 9% | 64% | 24% |
| 2001 | 22% | 74% | 36% |
| 2011 | 31% | 81% | 47% |
In addition, there is significant variation across states in terms of availability of household toilets in rural areas, as shown in Table 2. Table 2 also shows the change in percentage of rural households with toilets from 2001 to 2011. It is evident that the pace of this change has varied across states over the decade. Table 2: Percentage of rural households with toilets
| State |
2001 |
2011 |
% Change |
| Andhra Pradesh |
18 |
32 |
14 |
| Arunachal Pradesh |
47 |
53 |
5 |
| Assam |
60 |
60 |
0 |
| Bihar |
14 |
18 |
4 |
| Chhattisgarh |
5 |
15 |
9 |
| Goa |
48 |
71 |
23 |
| Gujarat |
22 |
33 |
11 |
| Haryana |
29 |
56 |
27 |
| Himachal Pradesh |
28 |
67 |
39 |
| Jammu and Kashmir |
42 |
39 |
-3 |
| Jharkhand |
7 |
8 |
1 |
| Karnataka |
17 |
28 |
11 |
| Kerala |
81 |
93 |
12 |
| Madhya Pradesh |
9 |
13 |
4 |
| Maharashtra |
18 |
38 |
20 |
| Manipur |
78 |
86 |
9 |
| Meghalaya |
40 |
54 |
14 |
| Mizoram |
80 |
85 |
5 |
| Nagaland |
65 |
69 |
5 |
| Odisha |
8 |
14 |
6 |
| Punjab |
41 |
70 |
30 |
| Rajasthan |
15 |
20 |
5 |
| Sikkim |
59 |
84 |
25 |
| Tamil Nadu |
14 |
23 |
9 |
| Tripura |
78 |
82 |
4 |
| Uttar Pradesh |
19 |
22 |
3 |
| Uttarakhand |
32 |
54 |
23 |
| West Bengal |
27 |
47 |
20 |
| All India |
22 |
31 |
9 |
II. Major schemes of the central government to improve rural sanitation The central government has been implementing schemes to improve access to sanitation in rural areas from the Ist Five Year Plan (1951-56) onwards. Major schemes of the central government dealing with rural sanitation are outlined below.
| Central Rural Sanitation Programme (1986): The Central Rural Sanitation Programme was one of the first schemes of the central government which focussed solely on rural sanitation. The programme sought to construct household toilets, construct sanitary complexes for women, establish sanitary marts, and ensure solid and liquid waste management. |
| Total Sanitation Campaign (1999): The Total Sanitation Campaign was launched in 1999 with a greater focus on Information, Education and Communication (IEC) activities in order to make the creation of sanitation facilities demand driven rather than supply driven. Key components of the Total Sanitation Campaign included: (i) financial assistance to rural families below the poverty line for the construction of household toilets, (ii) construction of community sanitary complexes, (iii) construction of toilets in government schools and aganwadis, (iv) funds for IEC activities, (v) assistance to rural sanitary marts, and (vi) solid and liquid waste management. |
| Nirmal Bharat Abhiyan (2012): In 2012, the Total Sanitation Campaign was replaced by the Nirmal Bharat Abhiyan (NBA), which also focused on the previous elements. According to the Ministry of Drinking Water and Sanitation, the key shifts in NBA were: (i) a greater focus on coverage for the whole community instead of a focus on individual houses, (ii) the inclusion of certain households which were above the poverty line, and (iii) more funds for IEC activities, with 15% of funds at the district level earmarked for IEC. |
| Swachh Bharat Mission (Gramin) (2014): Earlier this year, in October, NBA was replaced by Swachh Bharat Mission (Gramin) (SBM-G) which is a sub-mission under Swachh Bharat Mission. SBM-G also includes the key components of the earlier sanitation schemes such as the funding for the construction of individual household toilets, construction of community sanitary complexes, waste management, and IEC. Key features of SBM-G, and major departures from earlier sanitation schemes, are outlined in the next section. |
III. Guidelines for Swachh Bharat Mission (Gramin) The guidelines for SBM-G, released earlier this month, outline the strategy to be adopted for its implementation, funding, and monitoring. Objectives: Key objectives of SBM-G include: (i) improving the quality of life in rural areas through promoting cleanliness and eliminating open defecation by 2019, (ii) motivating communities and panchayati raj institutions to adopt sustainable sanitation practices, (iii) encouraging appropriate technologies for sustainable sanitation, and (iv) developing community managed solid and liquid waste management systems. Institutional framework: While NBA had a four tier implementation mechanism at the state, district, village, and block level, an additional tier has been added for SBM-G, at the national level. Thus, the implementation mechanisms at the five levels will consist of: (i) National Swachh Bharat Mission (Gramin), (ii) State Swachh Bharat Mission (Gramin), (iii) District Swachh Bharat Mission (Gramin), (iv) Block Programme Management Unit, and (v) Gram Panchayat/Village and Water Sanitation Committee. At the Gram Panchayat level, Swachhta Doots may be hired to assist with activities such as identification of beneficiaries, IEC, and maintenance of records. Planning: As was done under NBA, each state must prepare an Annual State Implementation Plan. Gram Panchayats must prepare implementation plans, which will be consolidated into Block Implementation Plans. These Block Implementation Plans will further be consolidated into District Implementation Plans. Finally, District Implementation Plans will be consolidated in a State Implementation Plan by the State Swachh Bharat Mission (Gramin). A Plan Approval Committee in Ministry of Drinking Water and Sanitation will review the State Implementation Plans. The final State Implementation Plan will be prepared by states based on the allocation of funds, and then approved by National Scheme Sanctioning Committee of the Ministry. Funding: Funding for SBM-G will be through budgetary allocations of the central and state governments, the Swachh Bharat Kosh, and multilateral agencies. The Swachh Bharat Kosh has been established to collect funds from non-governmental sources. Table 3, below, details the fund sharing pattern for SBM-G between the central and state government, as provided for in the SBM-G guidelines. Table 3: Funding for SBM-G across components
| Component | Centre | State | Beneficiary | Amount as a % of SBM-G outlay |
| IEC, start-up activities, etc | 75% | 25% | - | 8% |
| Revolving fund | 80% | 20% | - | Up to 5% |
| Construction of household toilets | 75%(Rs 9000)90% for J&K, NE states, special category states | 25%(Rs 3000)10% for J&K, NE states, special category states | -- | Amount required for full coverage |
| Community sanitary complexes | 60% | 30% | 10% | Amount required for full coverage |
| Solid/Liquid Waste Management | 75% | 25% | - | Amount required within limits permitted |
| Administrative charges | 75% | 25% | - | Up to 2% of the project cost |
One of the changes from NBA, in terms of funding, is that funds for IEC will be up to 8% of the total outlay under SBM-G, as opposed to up to 15% (calculated at the district level) under NBA. Secondly, the amount provided for the construction of household toilets has increased from Rs 10,000 to Rs 12,000. Thirdly, while earlier funding for household toilets was partly through NBA and partly though the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), the provision for MGNREGS funding has been done away with under SBM-G. This implies that the central government’s share will be met entirely through SBM-G. Implementation: The key components of the implementation of SBM-G will include: (i) start up activities including preparation of state plans, (ii) IEC activities, (iii) capacity building of functionaries, (iv) construction of household toilets, (v) construction of community sanitary complexes, (vi) a revolving fund at the district level to assist Self Help Groups and others in providing cheap finance to their members (vii) funds for rural sanitary marts, where materials for the construction of toilets, etc., may be purchased, and (viii) funds for solid and liquid waste management. Under SBM-G, construction of toilets in government schools and aganwadis will be done by the Ministry of Human Resource Development and Ministry of Women and Child Development, respectively. Previously, the Ministry of Drinking Water and Sanitation was responsible for this. Monitoring: Swachh Bharat Missions (Gramin) at the national, state, and district levels will each have monitoring units. Annual monitoring will be done at the national level by third party independent agencies. In addition, concurrent monitoring will be done, ideally at the community level, through the use of Information and Communications Technology. More information on SBM-G is available in the SBM-G guidelines, here.
Last week, the Power Finance Corporation reported that state-owned power distribution companies across the country made financial losses amounting to Rs 68,832 crore in 2022-23. This is four times higher than the losses witnessed in 2021-22, and roughly equivalent to the annual budget of a state like Uttarakhand. This blog examines some of the causes and implications of such losses.
Overview of financial losses
For several years now, electricity distribution companies (discoms), which are mostly state-owned, have witnessed steep financial losses. Between 2017-18 and 2022-23, losses accumulated to over three lakh crore rupees. In 2021-22, discom witnessed substantial reduction in their losses, primarily because states released 1.54 lakh rupees in subsidies to clear pending dues. State governments provide discoms with subsidies, so that domestic and agricultural consumers receive affordable power. These payments are typically delayed which creates cash flow constraints, and leads to an accumulation of debt. In addition, costs incurred by discoms in 2021-22 remained unchanged.
Note: Data from 2020-21 onwards does not include Odisha, and Dadra & Nagar Haveli and Daman and Diu since their distribution function was privatised in 2020-21. Data for Ladakh is available from 2021-22 onwards. Data for Jammu and Kashmir is not available. The Delhi Municipal Council Distribution Utility has been included from 2020-21 onwards.
Sources: Power Finance Corporation reports for various years; PRS.
As of 2022-23, losses have increased again to reach Rs 68,832 crore. This increase has been driven by rising costs. At a per unit level, the cost of supplying one kilowatt of electricity rose from 7.6 rupees in 2021-22, to 8.6 rupees in 2022-23 (See Table 1).
Table 1: Financial details of state-owned power distribution companies
|
Details |
2019-20 |
2020-21 |
2021-22 |
2022-23 |
|
Average cost of supplying power (ACS) |
7.4 |
7.7 |
7.6 |
8.6 |
|
Average revenue realised (ARR) |
6.8 |
7.1 |
7.3 |
7.8 |
|
Per unit loss (ACS-ARR) |
0.6 |
0.6 |
0.3 |
0.7 |
|
Total losses (in Rs crore) |
-60,231 |
-76,899 |
-16,579 |
-68,832 |
Note: Data from 2020-21 onwards does not include Odisha, and Dadra & Nagar Haveli and Daman and Diu since their distribution function was privatised in 2020-21. Data for Ladakh is available from 2021-22 onwards. Data for Jammu and Kashmir is not available. The Delhi Municipal Council Distribution Utility has been included from 2020-21 onwards.
Sources: Power Finance Corporation reports for various years; PRS.
Purchase of electricity from generation companies (gencos) forms about 70% of a discom’s total costs, and coal is the primary source for generating electricity. The following chain of events took place in 2022-23: (i) consumer demand for electricity rose by 10% over the previous year, as compared to a 6% year-on-year increase in the past 10 years, (ii) coal had to be imported to meet the increased demand, and (iii) global coal prices were elevated.
Coal imported at elevated prices to keep up with rising electricity demand
In 2022-23, demand for electricity increased by 10% over 2021-22. Between 2008-09 and 2018-19, demand increased at an annual growth rate (CAGR) of 6%. Electricity demand grew as the economy grew (at 7%), and largely came from domestic and agricultural consumers. These consumer categories account for 54% of the total electricity sales, and their demand rose by 7%.
Sources: Central Electricity Regulatory Commission; PRS.
Electricity cannot be stored at scale, which means that generation must be scheduled depending on anticipated demand. The Central Electricity Authority anticipates annual demand for each year. It estimated that demand in 2022-23 would be at 1,505 billion units. However, the actual demand was higher than anticipated in the first few months of 2022-23 (See Figure 3).
To meet this demand, electricity generation had to be ramped up. Coal stocks had already depleted from 29 million tonnes in June 2021 to eight million tonnes in September 2021, on account of high demand in 2021-22. To ensure uninterrupted supply of power, the Ministry of Power directed gencos to import coal. The Ministry noted that without imports, widespread power cuts and blackouts would have occurred.
Sources: Load Generation Balance Report 2022 and 2023, Central Electricity Authority; PRS.
Coal imports rose by about 27 million tonnes in 2022-23. While this constituted only 5% of the overall coal used in the sector, the price at which it was imported significantly impacted the sector. In 2021-22, India imported coal at an average price of Rs 8,300 per tonne. This rose to Rs 12,500 per tonne in 2022-23, a 51% increase. Coal was primarily imported from Indonesia, and prices shot up due to the Russia-Ukraine war, and demand surge by countries like India and China.
Sources: Ministry of Power; Ministry of Statistics and Programme Implementation; PRS.
Coal import situation going forward
In January 2023, the Ministry of Power advised gencos to import 6% of the required coal, to ensure sufficient stock until September 2023. It noted that due to floods and variable rainfall in various parts of the country, hydro generation capacity reduced by about 14%. This put additional burden on coal based thermal generation in 2023-24. Following this, in October 2023, the Ministry directed all gencos to continue using at least 6% imported coal until March 2024.
Sources: Ministry of Coal; PRS.
Structural issues in the power sector and its impact on state finances
Discoms witness persistent financial losses due to certain structural issues. Their costs are typically high because of old contracts with generation companies (gencos). Power purchase costs in these contracts do not account for production efficiencies over the years, and costs remain unchanged. Tariffs are only revised every few years, to ensure that consumers are protected from supply chain shocks. As a result, costs are carried forward for a few years. In addition, discoms sell electricity to certain consumers such as agricultural and residential consumers, below cost. This is supposed to primarily be recovered through subsidy grants provided by state governments. However, states often delay subsidy payments leading to cash flow issues, and accumulation of debt. In addition, tariff recovery from the power sold is not optimal.
Losses reported in the generation sector have also increased. In 2022-23, state-owned gencos reported losses worth Rs 7,175 crore, as compared to the Rs 4,245 crore in 2021-22. Rajasthan accounted for 87% of these, at Rs 6,278 crore. Note that under the Late Payment Surcharge Rules, 2022, discoms are required to make upfront payments to gencos.
Risk to state finances
Persistent financial losses, high debt and guarantees extended by states continue to pose a risk to state finances. These are contingent liabilities for state governments, i.e., in the event a discom is unable to repay its debt, the state would have to take it over.
Several such schemes have been introduced in the past to bail discoms out (See Table 2). As of 2022-23, discoms have an outstanding debt worth Rs 6.61 lakh crore, 2.4% of the national GDP. Debt is significantly high in states such as Tamil Nadu (6% of GSDP), Rajasthan (6% of GSDP), and Uttar Pradesh (3% of GSDP). Previous Finance Commissions have recognised that strengthening discom finances is key in minimising the risk to state finances.
Table 2: Key government schemes for the turnaround of the distribution sector over the years
|
Year |
Scheme |
Details |
|
2002 |
Bailout Package |
States take over the debt of state electricity boards worth Rs 35,000 crore, 50% waiver of interest payable by state electricity boards to central PSUs |
|
2012 |
Financial Restructuring Package |
States take over 50% of the outstanding short-term liabilities worth Rs 56,908 crore |
|
2015 |
Ujwal Discom Assurance Yojana (UDAY) |
States take over 75% of the debt of discoms worth Rs 2.3 lakh crore and also provide grants for any future losses |
|
2020 |
Liquidity Infusion Scheme |
Discoms get loans worth Rs 1.35 lakh crore from Power Finance Corporation and REC Limited to settle outstanding dues of generators, state governments provide guarantee |
|
2022 |
Revamped Distribution Sector Scheme |
Central government to provide result-linked financial assistance worth Rs 97,631 crore for strengthening of supply infrastructure |
Sources: NITI Aayog, Press Releases of the Ministry of Power; PRS.
For more details on the impact of discom finances on state finances, see here. For more details on structural issues in the power distribution sector, see here.
ANNEXURE
Table 3: Cost and revenue structure of discoms on energy sold basis (in Rs per kw)
|
Details |
2019-20 |
2020-21 |
2021-22 |
2022-23 |
|
Average cost of supplying power (ACS) |
7.4 |
7.7 |
7.6 |
8.6 |
|
of which |
||||
|
Cost of procuring power |
5.8 |
5.9 |
5.8 |
6.6 |
|
Average revenue realised (ARR) |
6.8 |
7.1 |
7.3 |
7.8 |
|
of which |
||||
|
Revenue from sale of power |
5.0 |
4.9 |
5.1 |
5.5 |
|
Tariff subsidy |
1.3 |
1.4 |
1.4 |
1.5 |
|
Regulatory income and revenue grant under UDAY |
0.3 |
0.1 |
0.0 |
0.2 |
|
Per unit loss |
0.6 |
0.6 |
0.3 |
0.7 |
|
Total financial losses |
-60,231 |
-76,899 |
-16,579 |
-68,832 |
Sources: Power Finance Corporation reports for various years; PRS.
Table 4: State-wise profit/loss of power distribution companies (in Rs crore)
|
State/UT |
2017-18 |
2018-19 |
2019-20 |
2020-21 |
2021-22 |
2022-23 |
|
Andaman and Nicobar Islands |
-605 |
-645 |
-678 |
-757 |
-86 |
-76 |
|
Andhra Pradesh |
-546 |
-16,831 |
1,103 |
-6,894 |
-2,595 |
1,211 |
|
Arunachal Pradesh |
-429 |
-420 |
NA |
NA |
NA |
NA |
|
Assam |
-259 |
311 |
1,141 |
-107 |
357 |
-800 |
|
Bihar |
-1,872 |
-1,845 |
-2,913 |
-2,966 |
-2,546 |
-10 |
|
Chandigarh |
321 |
131 |
59 |
79 |
-101 |
NA |
|
Chhattisgarh |
-739 |
-814 |
-571 |
-713 |
-807 |
-1,015 |
|
Dadra & Nagar Haveli and Daman & Diu |
312 |
-149 |
-125 |
NA |
NA |
NA |
|
Delhi |
NA |
NA |
NA |
98 |
57 |
-141 |
|
Goa |
26 |
-121 |
-276 |
78 |
117 |
69 |
|
Gujarat |
426 |
184 |
314 |
429 |
371 |
147 |
|
Haryana |
412 |
281 |
331 |
637 |
849 |
975 |
|
Himachal Pradesh |
-44 |
132 |
43 |
-153 |
-141 |
-1,340 |
|
Jharkhand |
-212 |
-730 |
-1,111 |
-2,556 |
-1,721 |
-3,545 |
|
Karnataka |
-2,439 |
-4,889 |
-2,501 |
-5,382 |
4,719 |
-2,414 |
|
Kerala |
-784 |
-135 |
-270 |
-483 |
98 |
-1,022 |
|
Ladakh |
NA |
NA |
NA |
NA |
-11 |
-57 |
|
Lakshadweep |
-98 |
-120 |
-115 |
-117 |
NA |
NA |
|
Madhya Pradesh |
-5,802 |
-9,713 |
-5,034 |
-9,884 |
-2,354 |
1,842 |
|
Maharashtra |
-3,927 |
2,549 |
-5,011 |
-7,129 |
-1,147 |
-19,846 |
|
Manipur |
-8 |
-42 |
-15 |
-15 |
-22 |
-146 |
|
Meghalaya |
-287 |
-202 |
-443 |
-101 |
-157 |
-193 |
|
Mizoram |
87 |
-260 |
-291 |
-115 |
-59 |
-158 |
|
Nagaland |
-62 |
-94 |
-477 |
-17 |
24 |
33 |
|
Puducherry |
5 |
-39 |
-306 |
-23 |
84 |
-131 |
|
Punjab |
-2,760 |
363 |
-975 |
49 |
1,680 |
-1,375 |
|
Rajasthan |
-11,314 |
-12,524 |
-12,277 |
-5,994 |
2,374 |
-2,024 |
|
Sikkim |
-29 |
-3 |
-179 |
-34 |
NA |
71 |
|
Tamil Nadu |
-12,541 |
-17,186 |
-16,528 |
-13,066 |
-9,130 |
-9,192 |
|
Telangana |
-6,697 |
-9,525 |
-6,966 |
-6,686 |
-831 |
-11,103 |
|
Tripura |
28 |
38 |
-104 |
-4 |
-127 |
-193 |
|
Uttar Pradesh |
-5,269 |
-5,902 |
-3,866 |
-10,660 |
-6,498 |
-15,512 |
|
Uttarakhand |
-229 |
-808 |
-323 |
-152 |
-21 |
-1,224 |
|
West Bengal |
-871 |
-1,171 |
-1,867 |
-4,261 |
1,045 |
-1,663 |
|
State Sector |
-56,206 |
-80,179 |
-60,231 |
-76,899 |
-16,579 |
-68,832 |
|
Dadra & Nagar Haveli and Daman & Diu |
NA |
NA |
NA |
242 |
148 |
104 |
|
Delhi |
109 |
657 |
-975 |
1,876 |
521 |
-76 |
|
Gujarat |
574 |
307 |
612 |
655 |
522 |
627 |
|
Odisha |
NA |
NA |
-842 |
-853 |
940 |
746 |
|
Maharashtra |
NA |
590 |
1,696 |
-375 |
360 |
42 |
|
Uttar Pradesh |
182 |
126 |
172 |
333 |
256 |
212 |
|
West Bengal |
658 |
377 |
379 |
398 |
66 |
-12 |
|
Private Sector |
1,523 |
2,057 |
1,042 |
2,276 |
2,813 |
1,643 |
|
All-India |
-54,683 |
-78,122 |
-59,189 |
-77,896 |
-13,766 |
-67,189 |
Note: Minus sign (-) indicates loss; Dadra & Nagar Haveli and Daman & Diu discom was privatised on April 1, 2022; New Delhi Municipal Council Distribution utility has been added from 2020-21 onwards.
Sources: Power Finance Corporation reports for various years; PRS.
